If last week’s employment data and Ivey PMI are any indication of things to come, this week’s Canadian economic data could be disappointing. On Monday, Housing Starts are expected to ease back to a seven-month low of 210K from 217.8K. Interestingly enough, the low we saw seven-months ago of 184.7K occurred during the same month that we saw disappointing Ivey PMI and employment numbers.
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Canadian Dollar Pummeled By Weak Oil, Labor Market Data
Fundamental Outlook for Canadian Dollar: Bearish[/B]
- USD/CAD jumped on Friday as the Canadian employment change plunged by 55,200
- Canadian business activity slowed in July as Ivey PMI fell to 65.5
If last week’s employment data and Ivey PMI are any indication of things to come, this week’s Canadian economic data could be disappointing. On Monday, Housing Starts are expected to ease back to a seven-month low of 210K from 217.8K. Interestingly enough, the low we saw seven-months ago of 184.7K occurred during the same month that we saw disappointing Ivey PMI and employment numbers. It remains to be seen if that was simply a coincidence or if a slowdown in business activity and hiring activity has a direct correlation with housing demand. Though it was likely happenstance, there is still downside risk for this particular release.
Meanwhile, the international merchandise trade balance is anticipated to rise to a surplus of C$5.8 billion from C$5.5 billion, as export demand from the US remains robust. On the other hand, manufacturing shipments are expected to slow to a 0.9 percent pace of growth, down from 2.7 percent. However, if export figures prove to be stronger-than-expected on Tuesday, there will be greater potential for the shipment figures on Friday to improve as well. Traders should also keep oil prices in mind, especially given the sharp drop in crude to nearly $115/bbl on Friday, as extensive moves tend to be followed by retracements. Nevertheless, significant resistance for USD/CAD does not come into play until 1.0795/1.08, leaving additional upside potential for the pair this week. – TB
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